More than half a million households were affected by the introduction of the ‘Bedroom Tax’ in April 2013. New research published by the Joseph Rowntree Foundation suggests the savings made by the Government were smaller than initially estimated.
When new benefit rules were introduced a year ago to discourage under-occupancy in rented accommodation, the Department of Work and Pensions hoped they would save £445 million in their first year.
But fewer households were affected than the government had thought, reducing the likely savings by £115 million, the report says.
Under the new rules, tenants living in social housing had their entitlement to Housing Benefit cut if their home was deemed to have more bedrooms than they needed.
Analysing evidence from the first six months of the policy’s operation, Steve Wilcox, former Professor of Housing Policy at the University of York, found 559,000 social housing households were subject to the new Housing Benefit size criteria when it was introduced. By November 2013, that figure had fallen to 498,000.
Within six months, according to an Ipsos Mori poll, 12 per cent of those who had initially been caught by the new policy were no longer affected. About six per cent had moved to alternative accommodation, while one in seven had improved their circumstances through work and a smaller number had taken in a lodger or tenant.
By November, 22 per cent of those affected were registered for a housing transfer or exchange. There were regional variations in the effect of the policy, with households in the north of England and in Wales finding it harder to move than those in London. As a result, the reduction in the numbers of affected tenants was much faster in London than in some other areas.
Where people did move, there were knock-on effects. In London and other high-demand areas, transfers to smaller properties increased the availability of larger homes for homeless or overcrowded families but reduced that of smaller homes for new applicants. In those areas where there was lower demand for family-sized homes, properties stayed empty longer before being re-let.
Social landlords responded in various ways. Some bought smaller homes from the private rented sector, while some selectively ‘redesignated’ homes as having fewer bedrooms.
The majority of landlords felt the policy made it more difficult to balance supply and demand for their housing stock, and only a minority said they had found the necessary adjustments manageable.
Around half of all tenants affected by the policy change were in rent arrears, and over time, the research report said, that could lead to more deciding reluctantly to move to smaller accommodation.
There were indications that social landlords have increased the amount of money they spent on welfare support and on managing rent collection. This helped to contain the overall levels of rent arrears caused by the introduction of the reform.
The report suggested the DWP could improve the policy by:
• Permitting an additional bedroom where a family member has disabilities and cannot share a bedroom.
• Making clearer provisions for households with carers and those with shared responsibilities for children.
• Introducing minimum sizes for single and double bedrooms, based on statutory overcrowding provisions.
•Allowing tenants to have one more bedroom than the current standard allows.
• Requiring landlords to offer alternative accommodation to tenants before applying the new size criteria.
•Increasing the bedroom standard to one bedroom above the current standard.
“To date, there are only limited indications of affected households moving into the private rented sector,” the report says. “But this could increase in the future as households grapple with increasing levels of rent arrears and legal actions by their landlords.”